UNH Stock Slips Premarket: Mizuho Warns Earnings Recovery Is Delayed, Still Sees 30% Upside

UnitedHealth flagged potential impacts on costs, benefits, and membership, with plans to reduce enrollment in 2026.

• Mizuho cut its price target to $350, citing a delayed earnings recovery.
• The stock remains under pressure following CMS's proposal of a nearly flat 0.09% increase in Medicare Advantage rates for 2027.
• While FY26 EPS guidance was broadly in line with consensus, rising medical care costs, a higher MCR, and policy headwinds weighed on the stock price.

Shares of UnitedHealth Group Inc. fell 2% in premarket trading on Friday after Mizuho lowered its price target on the stock, citing a slower earnings recovery following the company’s fourth-quarter (Q4) earnings report.

The stock closed at $268.55, its lowest level in over six months, and fell a further 3% in after-hours trading.

CMS Medicare Rate Shock Pressures UNH Stock

Mizuho reduced its price target on UnitedHealth to $350 from $430, implying a 30% upside from current levels. However, the brokerage retained an ‘Outperform’ rating. 

UnitedHealth shares have been under pressure since the Centers for Medicare & Medicaid Services (CMS) proposed a nearly flat 0.09% increase in Medicare Advantage payment rates for 2027, far below the 4%–6% rise analysts had expected. CEO Tim Noel said the Advance Notice does not reflect current medical utilization and cost trends and warned it could hurt seniors’ benefits and access to care. The stock plunged nearly 20% last week, its worst single-day decline in more than nine months.

The company also said it plans to scale back Medicare Advantage membership in 2026, with Noel expecting a decline of 1.3 million to 1.4 million members across group, individual, and dual special needs plans.

UnitedHealth Flags Rising Claims Costs

UnitedHealth forecast FY26 adjusted EPS above $17.75 compared with the consensus of $17.76, while guiding for revenue above $439 billion versus the consensus of $455.98 billion. Q4 adjusted earnings per share (EPS) of $2.11 matched estimates, while revenue of $113.22 billion came in slightly below the $113.73 billion consensus.

The health insurer said its full-year 2025 adjusted medical care ratio (MCR) rose to 88.9%, up from 85.5% in 2024, driven by Medicare funding cuts, the impact of the Inflation Reduction Act, and higher medical costs. The MCR denotes the share of revenue allocated to medical claims.

The company also reported that FY2025 operating earnings of $19 billion included $2.8 billion in charges related to cyberattacks, divestitures, restructuring, and related actions.

Wall Street Sees CMS Notice As Primary Trigger

Bank of America said UnitedHealth’s Q4 earnings per share and 2026 guidance indicate the company’s turnaround remains “on track,” describing $17.75 EPS guidance as a baseline for 2026.

However, BofA said the CMS 2027 Advance Rate Notice came in well below expectations and highlighted potential headwinds from V29 risk-adjustment changes, which it said could slow the recovery in Medicare Advantage and value-based care businesses. The firm maintained a ‘Neutral’ rating and a $360 price target, citing the need for greater clarity on 2027 policy changes.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment was ‘bearish’ amid ‘low’ message volume.

One user said, “you would think this name would be a beneficiary from the rotation out of tech that’s going on right now but nope ; relentless selling still. Unreal”

Another user said, “235 to 240 possible in the short term. That should be a buying opportunity.”

UnitedHealth’s stock has declined nearly 50% over the past 12 months.

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